What must an investment adviser do to act as a broker for both parties to a transaction?

For an investment adviser to act as a broker for both parties in a transaction, obtaining written consent from both clients is essential. This requirement is rooted in the principles of fiduciary duty and ethical conduct, which emphasize transparency and the need to avoid conflicts of interest. By obtaining written consent, the investment adviser ensures that both parties are fully aware of the adviser’s dual role in the transaction and agree to it. This protects the adviser legally and demonstrates a commitment to acting in the best interests of clients.

While notifying the SEC or completing Form ADV may be part of regulatory obligations for investment advisers, these actions do not specifically address the issue of consent from clients for dual representation. Similarly, disclosing fees is important, but it alone does not suffice to cover the ethical responsibility of obtaining consent from both parties involved in a transaction where the adviser would act as a broker. Thus, acquiring written consent is a critical step that underscores the adviser's accountability and transparency in their operations.